The Social Security Agency (SASSA) has opened a criminal case against financial services providers Cash Payment Services and Grindrod Bank.
Social Development Deputy Director, Brenton Van Vreden says the case against the two service providers was opened at the Sunnyside police station in Pretoria.
Van Vreden says the action follows the two entities’ failure to comply with the newly amended regulations as contained in the Social Assistance Act.
The amendment stops service providers from continuing deducting money from social grants recipients account without authority.
“The challenges of canceling the contracts we would need an alternative to pay grants. So if we just cancel the contract with CPS all 16 million grants would not be paid next month.”
“As you can imagine paying grants is a huge business, you need huge infrastructure to do that. So is not something we can just do
“We are really just trying to tell them to stop allowing money deduction, and if you don’t stop you’re breaking the law and the directors of your companies must be willing to pay criminal proceedings if you continue to do so.”
Van Vreden says the new regulation introduced by Social Development minister Bathabile Dlamini in 2016 instructs all financial services providers contracted to pay out social grants to stop deducting money from the recipient’s accounts.
He says the law now permits only one deduction per individual social grant account and that is life cover insurance.